|Health Maintenance Organizations Fail to Maintain Health Benefits|
|Subject||Price and Cross-Price Elasticity of Demand|
|Key Words||Managed care, cost, price, co-payments, inflation, real value|
Managed care companies are promoting their Medicare Health Maintenance Organization (HMO) plans for 2002. Seniors are shocked by their cost and restrictions on enrollment.
It is very different from the late 1980s when HMOs competed for business, for example by offering free eyeglasses, transportation to health care facilities, and health club memberships. Later, the HMOs competed on the number and types of doctors they provided. Now, they compete on price, trying to pass costs along to enrollees.
Some HMOs will not pay for brand-name drugs, even insulin. In some areas, this policy has not affected membership. In contrast, certain other plans are increasing drug coverage to reduce the use of hospital services. Some plans are increasing co-payments for outpatient surgery, while others are charging for ambulance rides.
HMOs have been prompted to do this because Medicare only pays what it reckons it would have cost to take care of an average patient three years before. The exclusion of recent medical inflation has a substantial effect on the real value of Medicare's contribution.
(Updated November 1, 2001)
|Source||Jodie Snyder, "HMO seniors feel pinch," The Arizona Republic, October 18, 2001.|
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